RBI to continue currency intervention: Rajan
To reduce volatility in the exchange rates, the Reserve Bank of India (RBI) will continue to use currency intervention, Raghuram Rajan, Governor of RBI said on Monday.
While addressing the gathering at the Inaugural Kotak Family Distinguished Lecture organised at Columbia Law School, New York (USA), Rajan said that the country will interfere in the foreign exchange market when there is a risk in the global markets with excess capital coming into India.
The governor stated that the currency would not change or move as a result of capital inflows but it would be more concentrated on the underlying principles of trade and services.
He informed that the foreign exchange reserves of India surged to a record high of $360 billion for the closing week on April 1. This surge is mostly due to RBI's intervention as the bank purchased dollar to stabilize the rupee as funds from foreign investors poured into the financial markets of the country.
"So we keep the exchange rate changing and never come in the way, but we intervene a little when the flows come in," he added.
The RBI governor said that he was also keeping a close watch on the inflation and rain forecasts of the coming monsoon season, assessing their impact on the monetary policy.
The Reserve Bank has reduced the repo rate by 25 basis points to 6.5 percent, earlier this month.
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